AUSTIN, Tex.-According
to a new industry survey conducted by global consultancy Emergo Group, medical
device manufacturers plan to increase prices for their products in order to
offset the effects of a proposed 2.3% excise tax on all device sales in the US set to take
effect in 2013.

The annual survey queried 180 medical device industry CEOs,
Presidents and Managing Directors about their business challenges and plans to
deal with the coming excise tax. Nearly 75% of the respondents lead companies
with fewer than 50 employees, which constitute the vast majority of medical
device firms.

When asked which changes they plan to implement at their
firms before the excise tax goes into effect, nearly 53% of survey participants
stated they would pass along some or all of any increased costs associated with
the tax to their customers. Roughly 37% of participants also plan to lower
production costs without reducing staffing, according to survey results.

In recent months, industry advocates have warned that
implementation of the US
excise tax would lead to mass layoffs. However, results of the 2012 Medical
Device Industry Survey suggest that manufacturers would consider reducing staff
as a last resort. Less than 17% of respondents indicated they would reduce
headcount to absorb the excise taxs impact. Increasing prices, lowering
production costs and investing less in research and development all ranked
higher than layoffs as options for dealing with the tax.

Chris Schorre, VP of Global Marketing
for Emergo Group notes: "Clearly, the results show that CEOs feel the tax will
have a negative impact on their business. However, most seemingly plan to deal
with it not by eliminating employees, but by cutting costs and passing along
increased costs to their customers. That may be due to the fact that many
smaller medical device companies are already running a very lean operation with
little room to cut headcount."

Biggest Business Challenge: Regulatory Changes

Asked to identify their biggest business challenges over the past year, more
than half of participants cited changing regulatory environments as their top
concern. Other key challenges included access to capital and credit (41% of
respondents), new product development (39%) and pricing pressures (39%).

Regulatory concerns were more pronounced among chief
executives of North American and Asian firms. Most European executives, on the
other hand, cited new product development as their biggest challenge.